What Is A Billing Descriptor?

A billing descriptor is simply the way your business name appears on your customer’s monthly credit card statement. So, you’re probably saying to yourself, “No need to read on…a billing descriptor is just the name of my company. What else do I need to know?” Actually, there’s a lot more to know about choosing your billing descriptor, and what you don’t know could cost you money. So read on…

Types of Billing Descriptors

Besides your company name, your phone number will appear with the billing information on your customer’s statement. This basic information about your company can be presented in two ways.

1. Default Billing Descriptor: This is the name you choose and authorize your processing company to use on every transaction. It appears on your customer’s statement once the transaction has been settled. That seems easy enough. But there are several things to consider. The company name you used to set up your merchant account may not be the name you use in your ads, or on your business card, or even on the sign that hangs above your door. And your business name is hardly ever used as your website name.

It should be easy to identify your company from your billing descriptor. As an example, a company that might advertise and do business as Mom & Pop’s Cleaning Service might actually be registered with the state as MPC, Inc. or maybe M&P, LLC. Neither of these names really give any indication of what the company does or sells. It’s simply the legal name of the business.

When reviewing their monthly statement, your customer is checking to see if all the charges are correct. In most cases you have space for 25 letters + your phone number to identify your company and your charge. A simple descriptor is always the best. And it should reflect your DBA name if it is different from the registered name.

Mom & Pop’s Cleaning Svc 111-222-1212 $50.00

With just a glance, your customer will recognize your name, and what the charge was for.

2. Soft Descriptor: Does your company provide more than one service or do you have more than one product line? Check with your credit card processor to see if they offer a soft descriptor. A soft descriptor, sometimes referred to as a product descriptor, can be customized to describe the service or product your customer purchased. This detail can be helpful when your customer is trying to identify a charge on their credit card statement.

For example, say you own a company called Original Quality Tires. Well, not only do you sell tires, but you also do oil changes and repair work. Imagine the confusion when your customer, who brought his vehicle in for an oil change, sees this default billing descriptor on his statement:

Original Quality Tires 111-222-1212 $32.85

That could have your customer scratching his head and wondering who bought tires with his credit card! That’s when a soft descriptor would be more useful:

OQT* Oil Change 111-222-1212 $32.85

This descriptor abbreviates the name of the company, but clearly indicates what service your customer paid for and how much he paid.

3. Dynamic Descriptors. Depending on your credit card processor you may have the ability to specify a unique description for each transaction at the time it is being processed. So, say your customer comes into your store and buys 4 tires. He could see this on his billing statement:

OQT* Tires 111-222-1212 $279.00

Or “OQT* Auto Repair” if he brought his car in for some service.

Granted these are simple examples, but you can see how a dynamic descriptor can help your customers identify charges from your company. And as an added bonus, if your company provides several services to another company, their bookkeeper will have the information at hand to know where to expense the charge.

Choose Your Billing Descriptor Wisely

So now that you know how to come up with a good company billing descriptor, let’s talk about what makes this so important.

Think back to a time when you reviewed your own – or your company’s – credit card statement and found a charge you didn’t recognize. Maybe you thought about it for a while but still couldn’t identify the company name or the amount of the purchase or service. What was your first thought? Probably that your card had been compromised. And your second thought: I need to call the credit card company and make a report.

Well, your customer is going to react the same way. He’s going to call his issuing bank and tell the customer service representative there’s a charge on his statement that he doesn’t recognize. This call will trigger a chargeback and start a process that is time-consuming for you to correct, and can be very costly. Not only will you lose the income from the sale while the chargeback is being disputed, you’ll also incur some chargeback fees that you can’t reclaim.

A good billing descriptor serves to remind your customer of the details of their purchase. And including a phone number in your descriptor gives customers a way to contact you directly to question the charge. Often all it takes is a phone call from your customer to clear up any confusion. That’s why merchants qualify for lower interchange rates if they include a phone number with their descriptor.

So at the very least, your billing descriptor should include your company name and a contact phone number. But if you look at all your options and decide on the right billing descriptor, you can feel confident you’ve done what you can to reduce the risk of confusion that leads to costly chargebacks.